The advantages of selling at auction are:
- Certainty – properties are not sold ‘subject to contract’ in the same way as through a traditional estate agency sale method. The successful bidder is legally obliged to complete the sale once the gavel falls.
- Good marketing exposure – many auctioneers advertise in national, local and trade press.
- Speed – sale is relatively quick and completion usually takes place 20 working days after the auction if the auctioneer is using RICS Common Auction Conditions, which you can download from the website at www.rics.org/cac.
Before the auction
If you want to sell a property at auction, first ask the auctioneer’s advice about its saleability, and what they would recommend as the guide and reserve prices. Once you’ve checked the date and venue of the proposed auction, ask the auctioneer for details of the terms of appointment. You need to agree these before the auctioneer does anything. Auctioneers have to follow a number of statutory regulations including the Estate Agents Act 1979. RICS members must also follow the RICS Rules of Conduct.
The terms of appointment will include:
- Their commission if the property sells at auction, or if it’s withdrawn of sold before the auction, or sold after the auction.
- Any extra charges and whether you’re liable for them.
The terms of appointment will also include the auctioneer’s right to:
- End or change the appointment.
- Instruct your solicitor to prepare the legal pack and special conditions of sale, and to attend the auction.
- Act on your behalf in the auction room, including signing the Memorandum of Sale.
- Manage things in the auction room, including the bidding increments.
- Sell the property at the reserve price or above.
You also have to agree procedures for the following with the auctioneer:
- Amendments to the reserve and guide price.
- Putting up sale boards at the property.
- Exclusive advertising, including cost.
- Inspections by potential buyers.
- Proxy, internet and telephone bidding.
- Identifying the successful bidder, getting the deposit cheque and signing the Memorandum of Sale.
- Dealing with any unsold lots.
The terms of appointment will include a warranty that the information you’ve supplied, or has been supplied on your behalf, is accurate. You also need to be aware of any disclaimers. In most cases, the auctioneer will be your sole agent. However, if you want to take on an associate auctioneer, they’ll need to agree their respective responsibilities, duties and fees with the auctioneer.
Both you and your solicitor need to see the auctioneer’s general conditions of sale. These are often RICS Common Auction Conditions, see www.rics.org/cac.
Anti-money laundering regulations mean the auctioneer has to carry out money laundering checks, including proof of identity and address, as soon as they can.
The next step is preparing the auction particulars. These may form part of your auction contract, and include any plans or photos of the property, which must be as up-to-date as possible. The particulars must be factual and accurate, complying with the Consumer Protection from Unfair Trading Practices Regulations and The Business Protection from Misleading Marketing Regulations 2008.
You need to liaise with your solicitor to make sure you’ve revealed anything that could affect the sale of the property to the auctioneer – for instance public health notices, local land charges, major arrears of rent or service charge, or disputes. While the auction properties are being advertised, the auctioneer should tell you about the level of interest in your property and let you know if you get any prior offers, unless their terms of appointment state otherwise.
If the lot is sold
Even though you’ll probably be at the auction, when the hammer comes down it signifies a binding contract, and it’s the auctioneer or clerk who signs and exchanges the Memorandum of Sale with the buyer and collects the deposit. If the auctioneer is using the RICS Common Auction Conditions, completion will be 20 working days after the auction.
If the lot is unsold
If the lot doesn’t reach your reserve price, you need to know what the auctioneer’s procedure is for dealing with unsold lots.